DOING BUSINESS IN PANAMA IN 2019

For over a decade, Healy Consultants Group PLC has efficiently and effectively assisted our Clients with i) business registration ii) business licensing iii) Panama business banking solutions iv) visa options and v) staff recruitment strategies. If properly structured, Panama business registration allows global entrepreneurs to legitimately conduct international business exempt from taxation.

Panama business setup summary

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Advantages and disadvantages

Advantages of Panama company registration

Setting up a company in Panama is easy because:

A Panamanian corporation can be registered in 2 weeks, with a minimum of 1 shareholder and 3 directors, who can be of any nationality. So, these companies can be 100% foreign owned;

The minimum paid up share capital required will be only US$1 and our Clients will not be required to travel to complete the engagement;

Panama’s company law does not require a resident corporation to publicly disclose details of its shareholders and directors, thereby allowing the investors greater privacy;

Foreign entrepreneurs can hold their company’s capital in US dollars. Consequently, they face no exchange rate risk when transferring capital to Panama.

Panama company incorporation is managed by the local companies registry, an arm of the Panama Public Register;

Panamanian companies will enjoy certain business incentives in the country including:

Companies investing US$50,000 in the tourism industry will receive benefits including i) 20-year exemption from import taxes payable on materials, equipment and vehicles ii) 20-year exemption from all real estate taxes and iii) annual accelerated depreciation of 10% for all real estate;

Investment in real estate enjoys certain incentives including i) 10-year corporate tax exemption on income from the sale/rental of the property ii) 100% deduction of renovation costs from the income tax and iii) 100% exemption from import duties to be paid on the renovation material;

Panamanian law only levies tax on income earned within the territorial boundaries of the country. Consequently, resident companies will pay no corporate tax on foreign investments and operations;

Companies registered in Panama can write off 10% of accounts receivable at the end of the year as bad debt under local accounting standards, thereby lowering the amount of corporate income tax payable;

Panama consistently ranks as the world’s best retirement destination. As a result, local businesses will have access to wealthy expats relocating to Panama on an annual basis;

The Latin Business Chronicle ranks Panama as the country with the 2nd highest internet penetration rate in Latin America. Consequently, businesses will find it easier to connect with consumers locally and around the world;

There are no foreign exchange controls in Panama to hinder the transfer of funds to and from the country;

The Panamanian currency (Balboa) is pegged to the US dollar. As a result, foreign entrepreneurs are protected from the problems of a volatile currency that usually plague developing countries;

Panama has signed Free Trade Agreements with 11 countries and Double Taxation Agreements with 10 countries to reduce withholding taxes on foreign payments. This makes Panamanian companies a more effective holding vehicle than many offshore companies.

Favourable geographical location is a major incentive for businesses to set up in Panama because:

The temperate country of Panama has a warm weather round the year. This and the air and water travel being affordable and convenient, makes this country a hub for American businesses;

The strategic Central American location bordering the Caribbean Sea and Pacific Ocean provides a massive locational advantage to all export-oriented businesses in Panama.

Disadvantages of Panama company registration

While setting up a Panamanian company is easy, doing business in the country can be cumbersome for foreign entrepreneurs because:

Corruption and inefficient bureaucracy plague the Panamanian government. As a result, working with the authorities can cost a lot of time and money when dealing with bureaucracy and requests for bribes;

The judicial system in Panama is highly inefficient. A favourable decision in a court hearing depends on your political connections, rather than the facts of the case. Consequently, our Clients will not be able to depend on the law to resolve disputes;

Professionalism is lacking among local businesspeople. Our Clients will find it difficult to work with local individuals, be it Clients, partners or suppliers;

Only 8% of the local population speaks English, with the majority of the population speaking only Spanish.

Our Clients are likely to face labour issues because:

It will be hard for Panamanian companies to find qualified labour in the country;

Panamanian law makes it harder to fire employees. Consequently, employers will find it difficult to get rid of non-performing employees;

Although union activity has historically been peaceful, in the recent years there has been an uptick in the number of strikes in the country;

Resident companies cannot hire more than 10% foreign employees.

In 2015, Panama implemented an agreement with the US allowing the US Government a transparent view of the Panamanian bank accounts of its citizens. As a result, US citizens will lose any semblance of privacy in regards to their Panamanian accounts.

High setup costs for offshore companies can be a disincentive for the potential entrepreneurs because:

The legal fees involved in establishing and incorporating an offshore company are quite high in Panama;

Panama also requires investors to hold property in the country which consequently are a huge investment for new or small-scale investors. Therefore, despite the tax-incentives for offshore companies, there are some challenges that need to be taken into consideration to incorporate a business in Panama.

Best uses for a Panama company

Panama is an excellent distribution base to the Americas because:

The World Economic Forum ranks Panama as the 2nd most competitive economy in Latin America. Furthermore, its location in Central America offers resident businesses easy access to both North American and South American countries;

According to World Economic Forum’s 2014 Global Competitiveness Report, Panamanian infrastructure is the best in Latin America. The country boasts excellent airport and sea port infrastructure by virtue of the Panama Canal, thus offering cheap connectivity with the rest the Americas;

Panama has an abundance of unskilled labour who are available for work at a monthly salary of US$830.

Company registration

Time to incorporate: Two weeks

Cost to set up: US$6,220

Minimum capital: US$1

Physical office required: No

Required appointments

Shareholders: 1

Directors: 3

Company secretary: No

Resident director: No

Key facts

Corporate tax rate: 25%

Corporate tax base: Territorial

Shelf companies: No

Main company type: SA

To help us engineer the optimum Panama corporate structure, please complete the 3-minute questionnaire below; then press the submit button below.

This data remains confidential and is not sold to third-parties.

Within 5 hours, one of our senior staff will ring or email you:

Company purpose?

Will the LLC be a trading company or a holding company?Will the entity be a subsidiary of a foreign company?The LLC will be tax resident? Having local customers and local staff and local suppliers?The entity will receive investment income or professional services fees or sales from trading with multi-national customers?Is double taxation treaty access important?Do you need our help to legally minimize your international tax obligations?Do you need our help to increase e-commerce sales (click link)?

Company structure?

Will the shareholders be individuals or corporate?In what country do you require a corporate bank account? Refer to this web page (click link) for ideasDo you need multi-currency corporate visa debit cards?Do you need a resident director?Nationality of shareholders and directors?Expected annual sales and net profits?Does the entity need a special regulatory license or import or export license?Additional comments?

Tell us about your existing business?

Name of your existing company?Your business web site address?What products and services does your company supply?How many years are you operating this business?Is your Firm regulated by a Government agency?In what country are the majority of your customers?In what country are the majority of your suppliers?

Tell us about you?

Your name?Your email address?What country are you based in?Specifically, what deliverables (click link) do you need?What is your US$ budget for the services you need?What does quality customer service mean to you?

How do we contact you?

For now, do you prefer Healy Consultants PLC staff to phone you, or just email reply you with some corporate solutions?If a phone call, on what number can our senior Consultant call you?If an email, what email address can our Consultant email you at?What is your preferred date and time for a phone call?In what language do you prefer we communicate with you?What matters would you like to discuss during the call; the agenda?

Thank you for taking the time to complete this important questionnaire. It will help us to timely complete your engagement with minimum inconvenience to you.

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Testimonial

“Pirster Pte is happy with the work that Healy Consultants undertook for the company. International incorporation can be fraught with opacity, anxiety and vulnerability - especially if it is being done remotely as we did. Healy Consultants worked really hard to make it transparent, straight forward and confidence-inspiring. I look forward to working with Healey Consultants again on future work and happily recommend them to others.”

Fiona Thompson, Managing Director Pirster Pte.

“We had taken Healy Consultants assistance in incorporating our entities in some of the complicated jurisdictions. Their approach right from the beginning has been very systematic, clear and efficient. It has been a pleasure to work with all of them.”

“Thank you Healy Consultants for swiftly project managing my engagement. From the moment I met you in Singapore Healy Consultants attended to my requirements and specific needs. I am more than satisfied with your service. Moreover, your weekly updates allowed me to continue to focus my attention on my global business while trusting you to deliver as promised.”

“Thank you Healy Consultants, you were instrumental in setting up of my Hong Kong based company, the whole process was completed in a professional and timely manner.”

Terry Skews, CEO Brittany Offshore Limited

“Healy Consultants, a professionally managed firm with clear understanding and knowledge about what client expects from them and delivers the same in a professional and timely manner. Kudos to their team.”

“Incorporating any company is comparable to setting the foundation blocks of your new company building, which you aim to build in the best location available. By choosing Healy Consultants you are laying the perfect foundations.”

“The one word that defines Healy Consultants is perfect professionalism. If you have Healy to set up your business abroad, you could focus on the operational overhead and let Healy take care of the rest. From Incorporation to Taxation, it’s a one stop solution. Rest assured, you will have the best people in the Industry working for you and providing you with the best possible information and suggestions.”

Raja Chakraborty, Director Streamlyn Pte. Ltd.

“Thank you Healy Consultants for successfully project managing our business set up in Kuwait, Lebanon, Qatar and Bahrain.”

“When it was time to establish a Space Academy in Singapore, TriVector needed a knowledgeable firm that could not only help us establish our infrastructure, but could also advise on the local and regional business climate. Healy was that firm, which is why we've been satisfied Healy Consultants for almost five years now.”

Timothy F Kauffman, CEO Trivector Services

“Finding the right partner was critical for VESL’s expansion in Asia and working with Healy Consultants has made this possible.”

“Healy Consultants were instrumental in the set up of our company. They have continued to provide exceptional support and advice over the years.”

Susan Gunnery, Managing Director Qudoss Group

“Healy Consultants is the best firm that we have ever worked with. Through our entire business relationship we were satisfied with provided level of quality and services. Healy Consultants have been responsive and detail oriented which has allowed us to stay focused on our business and not getting distracted with small details.”